A Bay Street sign is seen in the financial district of Toronto on June 2, 2014.Mark Blinch/The Globe and Mail
The drawn-out dream of creating a common Canadian securities regulator is one step closer to reality, with Ottawa and the group of provinces backing it set to announce a chair for the board of directors this week.
The creation of a common regulator, formally known as the Co-operative Markets Regulator, has been pushed back multiple times, but there is a belief that with more provinces, such as Nova Scotia, on the cusp of signing, the group has enough critical mass to forge ahead, according to people familiar with the negotiations.
The support coincides with the naming of a board chair for the Capital Markets Regulatory Authority, an announcement that is expected when the group meets in Vancouver this week. The expectation is that the chair will be someone who comes from industry, meaning he or she will not be from the regulatory world.
Finding a board chair has been a difficult task. Although the formal process was announced a while back, people close to it say finding someone who wasn't conflicted was a challenge. The chair, for instance, likely can't sit on the board of a public company that will be subject to the new regulator's rules.
A spokesperson for Nova Scotia's Finance Ministry wrote in an e-mail that "the door has always been open to joining the national common regulator if it's a good fit and offers positive benefits for Nova Scotians," adding that discussions with the federal government are ongoing.
The naming of a board chair comes weeks after the Quebec government announced plans to challenge the creation of a national securities regulator in court. Earlier in July, the province said it believes Ottawa's intention to create the regulator violates Canada's constitutional division of powers, even though it will be run jointly by the participating provinces.
"Regulation in securities trading is too important a matter to run the risk of its unhinging, in whole or in part, on legislation whose legal basis is potentially unconstitutional," Quebec Justice Minister Stéphanie Vallée said in a statement. "Given this new attempt by Ottawa to set up a pan-Canadian commission, Quebec needs to apply to the Court of Appeal once again."
Quebec's challenge comes after the federal government introduced a new regulatory model in 2013 to try to stay within legal parameters. The national regulator, as proposed, will be structured as a co-operative agency run by all participating provinces and territories – which currently include British Columbia, Ontario, Saskatchewan, New Brunswick, Prince Edward Island and Yukon – and the federal government, ensuring provinces are not ceding control to Ottawa.
Quebec said it will argue that the proposed model creates regulations that will ultimately apply even to provinces that opt out of the new body and ultimately gives Ottawa authority over the system.
The common regulator was supposed to be up and running by July 1 this year, but it has been plagued by delays. The latest came in April, when the supporting group announced plans to republish an updated version of draft legislation this summer, along with the detailed regulations laying out how it will operate. The legislation was originally published last September.
Once they are republished, they will be open to a 120-day comment period.
With files from Janet McFarland
Tim Kiladze